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“Afterward, West went into the office, where his first meeting of the day was with Holder and James Cole, the deputy attorney general, in Holder’s conference room. Just as he was telling the two men about his call with Dimon, his cellphone rang. It was Dimon again. West took the call, pacing back and forth at the far end of the room. Dimon proposed a meeting on September 26 and assured him that the bank would come back with a significantly increased offer. West agreed to recommend that Holder postpone the filing of Wagner’s complaint and meet with Dimon. That was an unprecedented move. It’s not every day that the attorney general of the United States postpones the filing of a civil complaint against a powerful Wall Street bank at the request of its CEO so that the two sides can cut a deal in private. Whatever was in Wagner’s complaint, Jamie Dimon did not want it to become public knowledge.”

Those of us who have been following the outrageous, unaccountable theft and criminality of the banking industry for many years reacted in a similar manner to the announcement of a $13 settlement late last year between JP Morgan and the Department of Justice. The first thought that crossed our minds was “no criminal prosecutions, another settlement of course.” Then, once the reality of the size of the settlement sunk in, we couldn’t help but come to the conclusion that no organization is going to cough up $13 billion unless there is some serious criminality at play.

So with what appears to be obvious fraud on behalf of JP Morgan why did nobody go to jail? Why wasn’t the public ever able to see the details of the bank’s crooked behavior? Why only a settlement?

William Cohan’s recent article in the Nation goes a long way to answering these questions. It becomes clear when you read the story behind the settlement that pretty much everyone involved went out of their way to make sure the public never saw any details. Even folks like New York Attorney General Eric Schneiderman seemed content in just getting as big a settlement as possible from the bank. It appear as if everyone involved was just looking out to do whatever would be best for his or her career rather than the application of justice.

Naturally, the settlement merely served to once again demonstrate that white collar crime pays in America. Jaime Dimon’s compensation was raised 74% last year to $20 million, the company’s stock is near an all-time high, and nobody went to jail.

That is how the authorities settle things on Wall Street. Meanwhile, this is how they settle things in Ferguson:

Sorry Mike, I guess you were just born on the wrong side of the tracks.

For much of 2013, Dimon, the chairman and chief executive of the formidable JPMorgan Chase &Company, was telling anyone who would listen that it was unfair and unjust for federal and state prosecutors to blame him and his bank for the manufacture and sale of mortgage-backed securities that occurred at Bear Stearns & Company and at Washington Mutual in the years leading up to the financial crisis. When JPMorgan Chase bought those two failing firms in 2008, Dimon argued, he was just doing what Ben Bernanke, Hank Paulson and Timothy Geithner had asked him to do. Why should his bank be held financially accountable for the bad behavior at Bear and WaMu?

It was a clever argument—and wrong. Dimon’s relentless effort to spin his patriotic story soon collided with the fact that Wagner, the US Attorney for the Eastern District of California, had uncovered evidence that JPMorgan itself was guilty of many of the same greedy and irresponsible behaviors.Piles of subpoenaed documents and e-mails revealed that JPMorgan bankers and traders had underwritten billions of dollars’ worth of questionable mortgage-backed securities that Dimon had been telling everyone had originated at Bear Stearns and WaMu. Worse, the bad behavior had occurred on Dimon’s watch.

The likelihood that the Justice Department would file Wagner’s civil complaint last fall—exposing publicly for the first time the litany of wrongdoing at JPMorgan and threatening to push it off the perch that Dimon had so artfully constructed for it over the years—ultimately brought Dimon to the table. On September 26, just weeks after the Justice Department shared a draft copy of Wagner’s complaint with Dimon, the two sides arranged for a summit meeting between Dimon and Attorney General Eric Holder. By mid-November, the bank had agreed to pay $13 billion in a comprehensive settlement of mortgage-related securities claims with various branches of the federal government and a group of states, led by the attorneys general of New York, California, Illinois, Massachusetts and Delaware.

It was the largest financial settlement of all time, and it kept Wagner’s complaint away from the prying eyes of the public. One thing is clear: Dimon’s claim that his own bankers and traders had done nothing wrong in the years leading up to the financial crisis wasn’t true. “The investigators and the lawyers were uncovering very viable evidence,” explains Associate Attorney General Tony West, who headed up the settlement negotiations on behalf of the Justice Department. “I think there was recognition that we had enough evidence there that would support the complaint and would support a robust lawsuit.”

In another instance, Wagner found that JPMorgan’s bankers had decided to eliminate a bunch of low-quality “stated income” loans—mortgages that had been granted without documented proof of the borrower’s income—from a pool of mortgages they were going to buy and securitize. When the originator of the mortgages objected to JPMorgan’s decision to remove these loans from the pool, a group of JPMorgan managing directors—including bankers, traders and salesmen—met with the originator and decided to buy two of the loan pools anyway, including those with the squirrelly mortgages. JPMorgan then proceeded to bundle “hundreds of millions of dollars of loans from those pools into one security.” Wagner found that between the start of 2006 and the middle of 2007—when the mortgage securitization frenzy was at its peak—JPMorgan packaged and sold securities containing thousands of mortgages that were rated by a third-party evaluator to be of extremely low quality, meeting few, if any, of the bank’s underwriting standards.

This, then, is the story of what happens when a hubristic CEO—often described as the reigning king of Wall Street—is confronted by a narrative he thinks he can control but ultimately cannot. It’s the tale of Jamie Dimon’s agenda and how it got derailed. But it is also the story of how the Justice Department has decided to handle the outrageous behavior of all the big Wall Street banks in the years leading up to the financial crisis. Unfortunately, it shows just how far the government is willing to go to avoid naming names, as well as to keep especially revelatory evidence of wrongdoing out of the hands of the American people. (Somehow, this is the new normal.)

Needless to say, there are many people eager to claim a large dollop of credit for bringing Dimon and JPMorgan to heel, and nary a soul at the bank willing to explain how or why it happened in the first place. Indeed, Dimon declined to be interviewed for this account, and the firm refused to allow anyone else at JPMorgan to comment. Why bother answering questions when your board responds to the $13 billion settlement by giving you a raise in compensation—to $20 million—for getting it done?

Schneiderman’s staffer explained that no documents had been subpoenaed and no witnesses deposed related to the underwriting of mortgage-backed securities. The behavior of the bankers leading up to the financial crisis didn’t seem to be on anyone’s agenda. Schneiderman was furious. He couldn’t understand what was going on. “At first I thought, ‘Maybe there’s some cabal, like Treasury and the OCC [Office of the Comptroller of the Currency] and these pro-bank people, stopping the aggressive Justice Department folks,’” he recalls.One senator came to see him and warned him that people in Washington were “trying to rewrite history” about the causes of the financial crisis.There didn’t seem to be a conspiracy to thwart the prosecution of Wall Street bankers, the senator explained, just timidity and indifference.

“I informed myself quickly about how bad this was,” Schneiderman says. “It was even worse than I had realized, because it was so out in the open. It was like a bank robbery without masks or gloves. There had been bad behavior. People knew it was bad behavior. It wasn’t too hard to understand. It was unbelievable to me, actually, and I had a hard time even accepting the fact that there weren’t investigations going on, because how could you not investigate this?”

By March 2012, Tony West, a Harvard graduate, former assistant US Attorney in California and partner at the law firm Morrison Foerster, had replaced Thomas Perrelli at the Justice Department, and the hard work of the new task force began in earnest. Schneiderman quickly grew dissatisfied. The effort seemed amorphous and like a “Potemkin village” to him. The most important thing, he kept hearing from the Justice Department, was to lower expectations.

On September 5, Richard Elias, an assistant US Attorney in Wagner’s office, sent Bruce Yannett, an attorney at Debevoise & Plimpton representing the bank, an e-mail with the subject line “JPMorgan—Confidential Settlement Negotiations.” Elias asked if Yannett wanted to see a draft of Wagner’s complaint, and Yannett responded that he did.

“Our purpose in sharing it with them was to show them that we were serious,” says a Justice Department official. “And if they were serious in trying to resolve it, they would see that we had fairly serious and well-founded allegations.”

Wagner’s complaint got Dimon’s attention. “It certainly quickened the pace of discussions,” Wagner says. “We were providing it to them, I think, both to show that we thought we had a very strong case, and also that it was coming very soon.” Cohen is convinced the potential filing was the tipping point. “What it meant was that this was all going to be splashed out in a filed complaint,” he says. “And I think once you start going public with allegations, it makes it more difficult for both sides to settle.”

Wagner’s complaint got Dimon’s attention. “It certainly quickened the pace of discussions,” Wagner says. “We were providing it to them, I think, both to show that we thought we had a very strong case, and also that it was coming very soon.” Cohen is convinced the potential filing was the tipping point. “What it meant was that this was all going to be splashed out in a filed complaint,” he says. “And I think once you start going public with allegations, it makes it more difficult for both sides to settle.”

Late on the night of September 23, West had a heated conversation with Stacey Friedman, another senior JPMorgan lawyer. “It was clear that we had reached an impasse,” West recalls. He told Friedman that the Justice Department was planning to file Wagner’s complaint the next morning. Then he called Wagner and alerted him to the possibility that the negotiations could reopen at the last minute. (At around the same time that night, Schneiderman called Cohen and encouraged him to come back with one more offer.)

But the same divisions prevailed: Friedman wanted the Justice Department to drop the threat of a criminal charge; she did not want a statement of facts; and she could not get remotely near West’s asking price. She also told West that Dimon might want to call him directly. West didn’t think much of it, because it seemed clear that the two parties weren’t going to be able to bridge the gap.

Afterward, West went into the office, where his first meeting of the day was with Holder and James Cole, the deputy attorney general, in Holder’s conference room. Just as he was telling the two men about his call with Dimon, his cellphone rang. It was Dimon again. West took the call, pacing back and forth at the far end of the room. Dimon proposed a meeting on September 26 and assured him that the bank would come back with a significantly increased offer. West agreed to recommend that Holder postpone the filing of Wagner’s complaint and meet with Dimon. That was an unprecedented move. It’s not every day that the attorney general of the United States postpones the filing of a civil complaint against a powerful Wall Street bank at the request of its CEO so that the two sides can cut a deal in private. Whatever was in Wagner’s complaint, Jamie Dimon did not want it to become public knowledge.

At one point in their second conversation, one person close to the negotiations recalls, Dimon started to chuckle and said something to West like, “You have so much power. You have no idea how much power you have.” West waved off Dimon’s assertion. “No, no, you have so much power,” Dimon repeated.

Dimon sounds extraordinarily creep right there. Like he’s envious of the power and wishes it was he who possessed it.

“Well,” West replied, “I’m not a Master of the Universe like you.” Dimon laughed and told West he would see him Thursday. The conversation with Dimon, plus those West was having with Cutler and Friedman, suggested that JPMorgan was planning to offer $6 billion to $7 billion in cash, plus $4 billion in mortgage relief. That estimate was not enough to stop the clock, but it was enough to buy some time. If the bank was willing to double its previous cash offer, West figured, he could probably get it into double digits.

Wagner says the meeting was cordial: “Clearly they had brought the big guns to show that they were serious about wanting to negotiate.” Despite Dimon’s requests, Holder told the JPMorgan contingent at the meeting that any settlement would not eliminate the possibility of future criminal prosecution against the bank or individuals there. “They left with an absolute clear understanding that there was no way they were going to get the criminal case relieved through a settlement,” West says. (For the record, there has not been the slightest inkling that the Justice Department is working on a criminal complaint against JPMorgan Chase.)

Here is where the story becomes even more disturbing, and you see an even fuller picture of how far pretty much everyone involved in the settlement went to make sure the public never found out about crimes at JP Morgan.

Very late in JPMorgan’s negotiations with the Justice Department—and despite the department’s agreement not to file the Wagner complaint—it almost became public anyway. In a completely different litigation filed in 2009, the Federal Home Loan Bank of Pittsburgh—one of twelve such banks created by Congress in 1932 to ensure that funding is available for mortgages—initiated a civil lawsuit against JPMorgan’s investment banking division, among other defendants, accusing JPMorgan’s bankers of selling it more than $1.7 billion in shaky mortgage-backed securities. “Pittsburgh FHLB believed that it had made a safe investment,” the bank stated in its amended complaint, but instead it had allegedly suffered some hundreds of millions in losses.

After the news broke in late September that JPMorgan had a deal pending with the Justice Department and the state attorneys general, and after word spread that the threatened filing of Wagner’s complaint had been a catalyst to the breakthrough in negotiations, lawyers for the Pittsburgh FHLB requested that JPMorgan turn over a copy. On October 17, a state judge in Allegheny County agreed and ordered JPMorgan to do so by November 1, or prove that the draft complaint did not exist.

JPMorgan didn’t want to comply with the court’s order, of course, and so it turned to the big guns at the Justice Department to try to quash, or at least delay, the Pittsburgh FHLB’s request. On November 1, Dana Yealy, the general counsel of the Pittsburgh FHLB, got a call from “attorneys with the Department of Justice” who wanted to speak with him “about some recent activity” involving the bank’s litigation against JPMorgan, according to an affidavit he submitted to the court. Yealy and his outside counsel then got on the phone with an unnamed attorney at Justice. “We were instructed we could not reveal the content of the call to anyone,” Yealy later reported. He received another call from Alyssa Kelman, an assistant general counsel at JPMorgan, who said she “understood” that Yealy had agreed to give the bank until November 15 to produce the draft complaint.

On November 14, West called Yealy and requested that he agree to another week’s extension. “He said he was very close to a final deal with JPMorgan, and that after one more week he would not care about the draft complaint,” Yealy recalled.

West also assured him that if he agreed to the new extension, the Justice Department wouldn’t support JPMorgan in its efforts to avoid turning over the draft complaint to the Pittsburgh FHLB. He was happy for the Pittsburgh bank to get whatever settlement it could from JPMorgan, just not at the expense of potentially screwing up the larger deal, especially since Wagner’s complaint—and keeping it out of the public realm—was one of the Justice Department’s main pieces of negotiating leverage with the bank. In an e-mail, DOJ officials acknowledged that JPMorgan’s determination to keep the complaint “from being released provided just enough leverage to help close the deal.” Yealy gave West until November 22.

On November 19, the Justice Department and the state attorneys general announced the $13 billion settlement, including $9 billion in cash to be paid to various federal and state agencies and another $4 billion to consumers “harmed by the unlawful conduct of JPMorgan,” in the form of loan modifications, mortgage principal forgiveness and efforts to reduce urban blight. The Justice Department made the explicit point that fully $2 billion of the $9 billion in cash was directly a result of wrongdoing at JPMorgan, not at Bear Stearns or Washington Mutual.

The Pittsburgh FHLB was not part of the Justice Department’s deal. On November 22, faced with Yealy’s new deadline, Kelman called him again. She asked for another extension before turning over the draft of Wagner’s complaint. This time, Yealy said no. At about 9 pm that night, JPMorgan made a motion to vacate the judge’s October 17 decision. The firm sought to delay any reconsideration of the order to release the draft complaint until January 2014. But the Pittsburgh FHLB fought back and asked for a hearing as soon as possible. “Public policy—the interests of full disclosure and transparency—demands just the opposite of what JPMorgan seeks,” the bank’s attorneys argued. “The circumstances of this motion therefore lead to one obvious question—what is JPMorgan trying to hide?”

Others were wondering the very same thing. Gretchen Morgenson, at the Times, perused the statement of facts that accompanied the settlement and came away unimpressed. “Much of it was the same-old-same-old, a not-very-lively description of a corrupted Wall Street mortgage factory, based largely on some facts that have been in the public domain for years,” she wrote on November 23. “In other words, although it took the Justice Department more than five years to pursue a major bank for its role in the mortgage mania, the investigation seems to have unearthed material that, by and large, could have been dug up with a spoon.”

JPMorgan argued to Judge R. Stanton Wettick Jr. that, in the wake of the $13 billion settlement, the draft complaint should not be turned over to the Pittsburgh FHLB. The Justice Department had provided JPMorgan with the document as a “confidential settlement communication,” the bank argued, and it should not be shared with the folks in Pittsburgh. Judge Wettick disagreed. He gave JPMorgan until December 17 to turn over the Wagner complaint. This time, the bank complied with the judge’s order. But still deeply concerned that the contents of the document would be made public by the Pittsburgh FHLB or its attorneys, JPMorgan quickly entered into settlement negotiations.

On January 3, JPMorgan Chase reached a confidential settlement with the Pittsburgh FHLB. One of the terms of the agreement was that the Wagner complaint would never see the light of day.

That ladies and gentlemen is oligarch justice.

The destruction of the rule of law is in my opinion the most corrosive thing that has happened to American in my lifetime. Any society can get through any amount of pain and turmoil as long as they believe in that the system will mete out justice no matter who committed the crime. I thought the following Tweet really summarized this point earlier today: